A Budgeting Spreadsheet to Manage Your Expenses

A budgeting spreadsheet is a very useful tool in managing your expenses. There are of course very fancy personal budgeting and expense tracking software available for sale, but with basic spreadsheet skills and a bit of dedication you can achieve the same results.

I think one of the most important benefits of formally doing your personal income and expenses budget on a spreadsheet is that reality stares you in the face! For retirement planning your goal is to reduce expenses and channel more into retirement provision savings.

Seeing your budget in front of you, you can quickly spot expenses that is out of line. Budgeting should be a life-long discipline. Recently I noted that our phone and mobile expenses were way to high. By restructuring our packages I could halve our monthly expense on telephone, mobile phone and Internet access. I consolidated our insurance with one company, after getting quotes from several companies, and realized a substantial saving.

I've always been pretty handy with my hands and handled most domestic maintenance and repairs, but I got lazy. I noticed that my expenses for maintenance and repairs were consistently exceeding my budget. It forced me to think twice before I phone a repair service and rather see if I can't fix it myself.

A very good model for a budgeting spreadsheet is offered by vertex42.com. Click on the link to download the spreadsheet. You can add items, rename, or remove items until you have personalized your spreadsheet. Start completing your budget based on your known expenses. You can of course rename the column headers. If you start budgeting and it is April, change the heading of the first column to APR and then change the other eleven headings.

You can even – with a bit of imagination - use the spreadsheet for a weekly budget. Make a copy of the basic spreadsheet. Change the heading at the top from ''Personal Budget' to say 'April 2012'. Change the column headings to 'week 1', etc. Ignore the 'Monthly Average' column. This you repeat for as many months as you and your family need to work your budget on a weekly basis. Visit our discussion on Budgeting Tools for Retirement Planning for more on this.

Don't be afraid to adjust and refine your budget as you go along. Track your spending and compare each month's actual income and expenses to your budget. The goal is to achieve or better your Projected End Balance.

No, the Projected End Balance is not to splurge on your annual family holiday. Your budget for your annual family holiday is already fixed under Entertainment! The Projected End Balance is like a buffer fund. When it reaches say $30,000 you put $20,000 in your retirement annuity or your special retirement fund created to plug the gap you identified when you used your retirement income planner. The Projected End Balance is then reduced to $10,000 as your new emergency fund. Your NET (Income less Expenses) will be much lower in the month of your family holiday than in other months, contributing less to the Projected End Balance.